Two groups agree all-share merger, creating worldwide transport group worth £1.9bn
Deal creates worldwide group with 40,000 vehicles and 70,000 employees
The Boards of National Express Group and Stagecoach have announced they have reached agreement on the terms of a recommended all-share combination of the two groups.
The two groups have been in talks since late September.
The enlarged group is expected to have a fleet of around 40,000 vehicles, a workforce of approximately 70,000 people, and with more than a billion passenger journeys made annually on its services.
Stagecoach shareholders will own approximately 25%. and NEG shareholders will own approximately 75% of the combined group. NEG also intends to continue using the Stagecoach brand.
The move will also see Stagecoach sell its 35% interest in Scottish Citylink, the marketing, retail and customer service activities of Megabus UK and the Falcon South-West coach service between Plymouth and Bristol to Singaporean-owned transport group ComfortDelGro, Stagecoach’s Scottish Citylink partner.
Stagecoach says the sale, for £8.75m, “proactively addresses potential regulatory considerations” in relation to the acquisition by NEG.
“Through this transaction, Stagecoach ensures that those business will continue to thrive under the ownership of the world renowned CDG brand,” says Stagecoach chief executive Martin Griffiths.
On the combination of the two groups, NEG says it intends to move quickly to bring the National Express and Stagecoach businesses together.
Upon completion, the combined group will be headquartered at National Express’s current head office in Birmingham with its headquarters functions located in both Birmingham and London.
It is expected that Stagecoach’s existing headquarters functions and related roles will remain in Perth and London and its Stockport-based administrative functions will remain there, pending the outcome of a detailed post-completion review.
That review, which is expected to take up to six months, will provide the basis for an integration programme designed to minimise disruption to passengers, customers and employees.
“The initial focus of this review will be on potential cost savings through corporate and administration efficiencies, the potential impact of which on duplicative roles in corporate, head office and senior management positions across National Express’s and Stagecoach’s respective businesses,” says NEG.
The remaining aspects of the review will also focus on other back-office savings, including those arising from IT process alignment, digital savings, combined procurement savings and non-depot property and office footprint rationalisation.
NEG says it will use “Stagecoach’s well-located depot network to run and maintain” its existing express coach operations in the UK.
Those depots will also become hubs for NEG to facilitate the acceleration of the expansion of National Express Transport Solutions (NETS), NEG’s non-scheduled and private hire coach and contracted operations business across the UK.
It is intended that the board of the combined group will comprise a combination of National Express and former Stagecoach directors.
Stagecoach’s chairman, Ray O’Toole, will become chairman with Sir John Armitt stepping down as chairman of NEG.
NEG CEO, Ignacio Garat, and National Express’s CFO, Chris Davies, will become CEO and CFO respectively of the combined group. Tom Stables, CEO of National Express UK and Germany, will become CEO of UK and Germany. Carla Stockton-Jones, Stagecoach’s UK MD, will become the managing director of UK Bus.
Griffiths and Ross Paterson will leave their respective roles as chief executive and finance director of Stagecoach.
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